Japanese authorities might step into the currency market and sell the euro if its exchange rate to the yen nears the ¥180 level, according to analysts at Citigroup.
The euro-yen pair traded as high as ¥175.43 on July 11 — a record since the common currency was launched in 1999 — before retreating, with the pair trading around ¥171 on Tuesday in Tokyo.
Japanese authorities likely spent approximately ¥3.5 trillion ($22 billion) on July 11 to prop up its currency against the dollar — marking what appeared to be the third intervention this year. The next day, the Bank of Japan conducted a rate check on the euro-yen pair, followed later by another suspected intervention in yen trade against the dollar. Rate checks typically signal that Tokyo is ready to intervene in the foreign-exchange market.